Here's a story that goes around in business school and consultant circles. I heard it from a colleague who picked it up during his education at INSEAD, a prominent European business school in France. The story concerns an experiment with a number of monkeys. They're placed in a room which contains a climbing pole. At the top of this pole, some nice juicy bananas are placed, so obviously the monkeys try to get at them. When any monkey climbs high enough to reach for the bananas, the entire room is soaked with cold water, which results in very unhappy drenched monkeys. This happens every time a monkey goes for the bananas and as they're pretty smart primates, they catch on. So when any of them makes an attempt at the bananas, the others quickly give him a good old pummeling to prevent getting drenched. Now the researchers remove one of the original monkeys in the room, as replace it with another one. The new one sees the bananas and tries to get at them, but gets a hefty beating at the hands of the drench-conditioned monkeys. The researchers keep on replacing monkeys in the room until none of the original ones remain. None of the monkeys in the room has ever gotten drenched or eaten the bananas. Yet the group still enforcers the no-pole-climbing rule, but without knowing why.

This story reminds me of the behavior of European politicians. They're stuck on autopilot where the future of the European Union is concerned, moving boldly forward into the barren snowcovered tundra of a European Superstate without exactly knowing why. Their predecessors set out on this course, and so did theirs, going back all the way to the times of Adenauer and De Gaulle. After the carnage of the Second World War, the post-war generation of politicians in Germany and France wanted naturally to make sure no such catastrophe could ever again befall the European continent. Aside from the military framework of NATO that extended American protection to Western Europe from the Soviet threat, the European set out on trying to integrate their economies. Prosperous and closely integrated economies would be less likely to attack one another militarily. The Treaty of Rome signed in 1957 established the European Coal and Steel Community, the precursor organization of the European Economic Community which in turn became the European Union.

Much has changed since 1957, of course. The ECSC consisted of six countries: France, Germany, Italy, the Netherlands, Belgium and Luxembourg, and the level of integration was minimal. The European Economic Community which flowed forth from it was essentially a customs unions, and later turned into a free trade zone. But the tone was set in the Treaty of Rome, which contained the fateful phrase of working towards "ever closer union." And thus it came to be. The ever closer union of European countries has been propelled by this original visionary document.

The key issue which the EU has never come to grips with is that the organization has been gathering new members through the years. The original structures, set up for six members, are already under severe strain from the current 15-strong membership. The Copenhagen summit has just resulted in the admission of a new wave of countries to the EU in May 2004. This will exacerbate the problems even more. The conceptual flaw that underlies the EU is not going to be addressed though, as solutions are going to be sought in reforming procedures rather than fundamental concepts. It's that vision thing.

The EU's problem is that none of the European politicians has a realistic vision for its purpose. They're still on the course of "ever closer union" that had been 45 years ago without really knowing why anymore. Aiming for ever close union is what European politicians do. Questioning this is just not done in polite (dare I say sophisticated) political circles. The process of integration pushed by the political elites has run far ahead of what the domestic electorate is willing to put up with, creating an internal problem. Thus far, it has been containable.

The EU will not survive in its current form. The imprint of the original small club of industrialized countries has already been coming under pressure with the admission of poorer countries like Spain, Ireland, Greece and Portugal which have economies greatly dissimilar from the original member countries. The Scandinavians and the British could be accomodated relatively easily. The others have received massive subsidies from the richer members. Only their relatively small size in relation to France, Germany and Britain made it possible to pull them along. Ireland in particular has done very well out of all this, in large part because of its domestic policies. In in its current state, it's doubtful whether enlargement is a good thing for the new entrants. They're more likely to get slowed in their economic development rather than helped with the ponderous weight of EU regulations weighing down on them. They may yet decide to decline the invitation.

There are two reasons why the new entrants will change the EU. First, the per-capita GDP of the new entrants is on average substantially below that of Portugal and Greece, the current worst performers in that regard. The gap now between the top and the bottom and per-capita GDP is going to be bigger than it ever has been within the EU. The second reason is the numbers. Ten new members with over 50 million extra inhabitants makes this the largest expansion the EU has seen thus far. So the EU is going to be much bigger and much more diverse than it ever has been. That's why it can't survive in its current form.

That could be a good thing. Could the EU become even worse than it is now? If the Euro-federalists get their way, certainly. The staggering inertia of the bureaucracy that has accumulated will not be deflected easily. But the changes that the EU will have to face are more fundamental than that. What is the purpose of the EU? Does it really want to become a country? Does it want to promote prosperity, civil society and a liberal democracy? The latter goal is much more achievable than the former, and more desirable too. The problem is of course that the EU is no place of moral authority to lecture on any of those subjects. Lately the EU's meddling with the economy has led to decreasing prosperity, while its opaque and elitist power structures have eroded the foundations of the social compact that makes civil society possible and democracy and the EU have been kept firmly separated.

Yet the EU's best chance for success and survival is to abandon its ambitions for creating a United States of Europe, and focus on more practical goals. Make the free trade area work. Help the new entrants in establishing and engraining the insitutions of a pluralistic society. Once you remove the prospect of the "USE" from the equation, many issues become more tractable. The key here is Turkish accession to the EU. If the goal is to create a single European Superstate, then there is no way Turkey can be admitted. But the Superstate idea would not work even now with the 15 members, as the divergences in culture and mores are too large to become part of a single country. If the EU becomes an enabler rather than the petri dish for a Superstate, then Turkish entry is no problem. In this whole debate it's not the Turkish domestic issues that are the impediment, it's the unresolved fundamental dilemma at the heart of the EU that has paralyzed the situation.

By allowing these 10 new countries into the club, the EU will be changing; it will never again be as politically or culturally homogenous as it was in 1957. The rearguard action to maintain the old spirit of those days (and the French vision of a Europe in its image) is now being fought at the constitutional convention. The new EU constitution will try to preserve the original spirit, and it may succeed in that on paper. But it will be overtaken by events on the ground. The positive outcome would be a reformed EU that makes more sense than the current structure, a Free Trade Area Plus. If things get ugly, then the EU will slowly disintegrate as it loses its relevance, and we'll see a Core EU develop in the west of the continent.

The is Old EU is dying. Let's hope the new one will do better.

Postscript: the story about the monkeys with which I started this article can be traced back to Competing for the Future by Gary Hamel and CK Prahalad. No references to any actual study can be found, so it's likely to be just a fable. These things tend to take on a life of their own and become a standard part of management consulting. As a parable they work fine, but it would have had much more impact if the story had been true. Oh well... welcome to the world of management consultants and their ilk.